Transcription

4 Why is Governance different from Sourcing? 90% of sourcing effort is spent on executing Tender Projects. It s (almost) all about savings. Identified savings potential invariably (?) results in a Tender Project. Methods are highly focused on the Tender Project. Most methodologies contain guides on how to set up governance structures, but it s part of the Tender Project. Deloitte Outsourcing Method When the Tender Project closes, interest fades -never to return. Until the s hits the fan! - 4 -

6 IT-support for Sourcing Most Sourcing Tools begin with a contract archive adding bells and whistles along the way. Moving up the food chain means looking through spend data for opportunities for Tender Projects. Further up is improved support for the Tender Project, RFx and e-auction tools. Contract DB Spend management E-sourcing E-auctions Req s DB Clauses DB Top of the food chain is functionality enabling reuse of requirements and contract clauses. Even when addressing Contract and Governance, it s mainly about Tendering and Compliance. SAP / Ariba CLM is a good example: - 6 -

7 IT-support for Governance Managing contracts in the run state requires a materially different focus from the Tender Project. This translates to branching off in terms of tool support: Contract and Spend administration are shared pre-req s. Structured obligation tracking and monitoring is typically the next step, ensuring that a) specific deliveries and obligations are met. b) reporting key elements of the specific agreement. Integrating across Vendor deliveries and looking across the value chain is next. Integrated Governance Contract DB Obligation Tracking Spend - 7 -

8 The case for Governance - 8 -

9 The case for improving Governance Outsourcing industry is mature, particularly within IT domain. However, Outsourcing governance is still maturing and Companies still have significant difficulty harvesting value from their contracts. Lack of management is central to the problems with multiple sourcing. 84% of companies do not have what they regard as a mature governance model. Financial Times 63% of companies surveyed believe they lose an average of 25% of contract value due to poor governance. International Association of Outsourcing Professionals Companies report up to 30% of the expected value of their transaction is lost through ineffective governance. ISG Research Study The Contract will guard you against failure. Governance will make you successful

10 What factors/components do you feel are most critical to a successful outsourcing relationship? A spirit of partnership between client and vendor 49% 15% Well engineered service level agreement 9% 34% Strong joint client/vendor governance of the agreement 15% 14% Consistent client and vendor communications 7% 10% Detailed contract terms and conditions 8% 9% A strong vendor account management team 5% 10% A strong internal vendor management team 6% 7% Very Important Important Client insights... Relationships are built upon a foundation of trust and developed through structure and collaboration... Large Financial Services Client Source: Deloitte Global Outsourcing and Insourcing Survey

18 Survey of Governance Tools market Peer ranking: Ariba CA Oblicore Contiki Oracle SciQuest ServiceNow Contract Financial Performance CA Oblicore has the strongest all-round offering Ariba, is second in line, SciQuest and Oracle Ariba and Oracle are not specifically geared towards management of complex / IT contracts ServiceNow requires customer specific development in order to even do Vendor Contiki has focused specifically on the energy industry SciQuest is no longer life sciences only. Other vendors have left the market or declined. None of the legacy Tools are spot on from an Integrated Goverance point of view

19 Conclusions Multisourcing and Customers taking control of service integration will continue to drive increasing complexity in CVM landscape Client retained organizations will continue to be challenged on capabilities, cost and resources. Business is demanding increasingly integrated services putting pressure on CVM functions to manage and report in an integrated manner. Major benefits can be secured by preventing value leakage and improving collaboration Governance Tools are maturing and native Governance offerings are appearing

20 Implementation learnings

21 Implementation learnings 1. Secure management buy in. Clear objective and mandate. 2. Choose your tool according to your priorities: Functionality required in the short term? Where do you want to go in the long term? 3. Secure deep knowledge of your processes. Engage the experts. Don t let the junior on the bench drive this. 4. take the lead. This is defining all your processes. It s core business. 5. Take things one step at a time. Build up, learn, revise, re-plan, re-do. Contract DB Spend Obligation Tracking Integrated Governance

22 Thank you for your time! About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Copyright 2010 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu

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